Since the beginning of the global financial crisis a decade ago, Germany has asserted itself as Europe’s dominant economic power; by 2024 it will also have the largest military budget in the European Union. Yet if from the outside Germany looks like an economic powerhouse and a re-emerging geopolitical force, it is also embroiled in a deep social and political crisis.

When Angela Merkel became chancellor in 2005, the two big “Volksparteien” (the mass “catch-all” parties, the Christian Democratic CDU/CSU and the Social Democratic SPD), together still commanded 69.4 percent of the vote. Yet during her chancellorship, these parties have been forced to govern together in three ever-shrinking grand coalitions. Today, a year after federal elections saw a far-right party enter parliament for the first time since 1952, these two forces no longer represent a majority of Germans. The polls give them a combined tally of just 42 percent.

The political system built in the postwar period faces erosion and even fundamental transformation. However, this crisis in the party system is also connected to underlying social and economic processes. Today we see the end of the West German Dream, of an egalitarian “social market economy” with “prosperity for all,” added to the death of the East German Dream of a socialist society leaving capitalism’s insecurities, crises, and class divisions behind. Historians and social scientists always warned that the acceptance of liberal democracy in (West) Germany always depended on the existence of this kind of general welfare and universal social security. So how can it survive today?

In this interview, originally conducted for Novosti on the occasion of Merkel’s resignation as CDU leader (she remains German chancellor), Jerko Bakotin spoke with Ingar Solty about the erosion of German democracy and the wider fallout for Europe.

JB

How would you summarize Angela Merkel’s legacy? Two of the most significant moments were probably her handling the eurozone crisis and the so-called refugee crisis.

IS

The legacy will not be a very good one. The Economist once termed Germany a “reluctant hegemon.” In fact, what Merkel showed was that under her leadership, during the global financial and eurozone crisis, Germany was capable of domination, but was unable to actually lead hegemonically. In the 1980s, with the Single European Act of 1986, European integration was set on a neoliberal trajectory it has followed ever since. That, however, did not lead to what neoclassical economists call equilibrium and convergence, but instead it led to increasing economic divergences and imbalances. As a result, southern Europe was deindustrialized.

Nevertheless, instead of tackling the root problem by a state-active, Europe-wide industrial policy, Merkel and finance minister Wolfgang Schäuble treated the structural deficit economies of the European periphery as if public debt and wage levels were the problem. This presented a kind of morality play, as if the peripheral states had been living above their means. And in the name of competitiveness, the pursued strategy sought internal devaluation of labor costs.

The so called “rescue of Greece” was in fact a second bank bailout — 89 percent of the money which was given went directly to creditors, mostly German and French banks. Strict austerity was imposed on Greece in the name of the European Union’s new economic governance, with health care and other social spending cuts, pension cuts, public-sector wage and hiring freezes, the privatization of public assets, and, as Thorsten Schulten and Torsten Müller have thoroughly documented, the curtailment of labor rights such as collective bargaining agreements across Europe.

Today, France offers another fine example of the neoliberal and antidemocratic nature of Europe’s new economic governance. A tremendous class-based democratic movement from below, the gilets jaunes, is extracting social and economic policy concessions from a government headed by a Wall Street investment banker. Now, this is what democracy looks like! However, economic reforms benefiting the working class will cause France to violate the European Union’s austerity rules on annual debt, and the European Semester budget-control process will probably levy financial penalties on France.

And regardless of what you think of the Italian government and its immigration policies, here also its democratic decision to break with the austerity orthodoxy has led to the looming fine of 3.5 billion euros. In short, under Germany’s domination, democracy is curtailed by the European Union’s new constitutionalism and the European working masses were made to pay for the crisis caused by the bankers. And this is the politics that Merkel and Schäuble (with his successor Olaf Scholz, a social democrat) stand for.

Internationally, many have praised Merkel’s seemingly humanitarian stance during the refugee crisis. They forget, however, how Western foreign policy has been causing conflicts and the displacement of millions of human beings for decades — from the “war on terror” and other Western wars to increasing arms exports, to the West’s debt imperialism and enforced “free” trade in the Global South. And they also forget that Germany is the leading force behind the “Compact with Africa” and the so-called “Economic Partnership Agreements” with Africa, which are going to force millions more to migrate.

But even if we give credit to Merkel’s subjective intentions in handling the refugee movement, she again was unable to lead. She wanted to express internationalism after especially American criticism of Germany’s hard stance in the Greek crisis; but while she famously said “we can do it” she did not provide the financial means by which it could actually “be done,” for instance, through more far-reaching social reform helping both domestic and migrant workers.

Instead, under her leadership, reflecting the power of the capitalist class, Germany was put on a path of balanced budget amendments and wealth inequality running wild. What theoretically could and should have been an easy task was imposed on local municipalities already struggling financially under austerity conditions. Schäuble estimated the initial costs of the “refugee crisis” to amount to twenty billion euros, but the federal state only covered eight billion. Thus the 2015 refugee crisis became a stimulus program to the far right, which until then had been on a downhill slope. Alexander Gauland, co-chair of the far-right Alternative für Deutschland (AfD) aptly praised the “refugee crisis” as the best thing that could have happened to him and his party, because it is easier to thrive on right-wing authoritarian demagoguery than on a critique of Target 2 and Eurobonds.

Still, it was not just Merkel’s economic policy and her handling of the so called “refugee crisis” which have propelled the far right. It is also her presidential style of politics, because it depoliticized politics and eroded the differences between left and right, feeding the anti-establishment rhetoric of the in fact rather well-established and billionaire-financed, pseudo-rebellious far right. So, the AfD is of Merkel’s making. And all of this is her legacy, the poisonous soup all of us will have to stomach over the next decades.

JB

According to some, Merkel’s departure foreshadows the end of the stable liberal-democratic order. However, the CDU chose continuity, personalized by Annegret Kramp-Karrenbauer. What does her election mean for Germany?

IS

Kramp-Karrenbauer (AKK) is indeed closest to continuing Merkel’s legacy. The other candidates Jens Spahn and Friedrich Merz professed strong anti-Merkel orientations in attempts to appeal to an angry party base. Both Spahn and Merz were widely considered to embody a shift to the right. However, we must not forget that AKK is herself a social conservative, who opposes reproductive rights, and also built her campaign on showing how close she is to big business. She ran on a platform of corporate tax breaks, which is what League of German Industrialists’ president Dieter Kempf and the entire German capitalist class have been pushing for ever since Donald Trump came to power and announced his tax cuts for capital and the wealthy.

AKK wants to commit Germany to the devastating new race to the bottom to the sole benefit of global capital. Since Trump’s decision, eleven of the thirty-five OECD countries have similarly cut their corporate tax rates while others have found more ways to slash workers’ rights, for instance with Macron’s labor market reform in France, or the decision by Austria’s conservative/far-right coalition to reintroduce the twelve-hour work day, or Hungary’s new “slave law” which allows capitalist enterprises to demand from workers up to four hundred overtime hours per year.

Given Germany’s competitive edge, AKK’s proposal would feed competitive pressures at the EU periphery, driving southern European workers ever-deeper into insecurity, poverty, and misery. In short, I expect that AKK will reinforce the ongoing class struggle from above. However, she will not do it in the upfront and aggressive style of a representative of finance capital like Merz, the German Macron, who is on the board of Germany’s single largest asset owner, but rather in Merkel’s depoliticizing presidential “Mutti” [“Mom”] style.

JB

What impact will AKK have on the rest of the political system? Can we expect that the present CDU-SPD grand coalition will continue until the 2021 federal elections?

IS

AKK’s biggest effect may well be to hurt the Left. Had Merz won, the political spectrum would have clearly polarized between left and right and between capital and labor. The SPD leadership would have been unable to justify entering into another grand coalition with Merz as CDU candidate for chancellor. Furthermore, over the next few years the SPD would have had an easier time of renewing itself, appearing as a social conscience opposed to Merz’s “market fundamentalism,” “turbo or vulture capitalism” etc. And this would also have strengthened Die Linke, because the shift of public discourse toward the economy and the “social question” would blow wind into its sails, to use Walter Benjamin’s famous metaphor, since Die Linke has the highest credibility on social justice.

Of course, we must also remember, that under current conditions a grand coalition will no longer even have an absolute majority, since shortly before the leadership campaign the CDU was polling at 28 percent and the SPD at a historic low of 14 percent. This is also the reason why Merz clearly intended to create a neoliberal bourgeois coalition with the ascendant Greens, continuously praising their bourgeois “sensibility,” while going as far as denouncing the AfD as “national-socialist,” i.e. unreliable for capital and useless for policies in the interest of the dominant transnational capitalist class-faction, like the Blackrock hedge fund and HSBC bank, which he works for.

Indeed, as long as the AfD holds to its anti-euro position, CDU/AfD coalitions at the federal level are impossible, because for this dominant faction in the German power bloc the single currency and the European Union are absolutely essential stepping stones for enforcing their global economic and political interests. And this is the decisive difference between the Nazi party in the 1930s and the AfD today.

Hitler’s Nazi party and its program of eliminating the labor movement and the Weimar republic — a precondition for challenging Anglo-American hegemony through world war — were absolutely compatible with, and acted in the clearly stated interests of what was still a nationally organized bourgeoisie. The Nazis essentially stood in continuity with the German ruling class’s traditional strategy of “internally killing off social democracy, if necessary by bloodshed, and then going to war externally,” as Emperor Wilhelm II described it.

However, today, under the conditions of global capitalism and a transnationalizing capitalist class, of global value chains, the AfD’s economic nationalism is incompatible with this dominant faction’s interests. Obviously, we need to distinguish between the program of today’s so called “right-wing populist parties” — I prefer to speak of right-wing authoritarian nationalist parties — and the actual policies that they implement once in power.

Trump’s United States and the Austrian People’s Party/Freedom Party coalition have given us ample evidence of how the “normative power of transnationalized production relations” rein in anything incompatible with neoliberal global capitalism. Trump was prevented from following through with his critique of free trade and empire while the Austrian Freedom Party’s plan to hold a referendum on EU membership had to be scrapped and was replaced by a commitment to the EU going into the coalition.

What the far right does get is the freedom to implement authoritarian policies against its traditional political enemies, i.e. Muslim and foreign-born members of the working class and the antifascist left, because they are also the enemies of the dominant capitalist class faction or of little importance to them.

JB

So you’re saying that the CDU will turn to the right — not as much as it would with Merz or Spahn, but with more right-wing policies than during Merkel’s time as leader?

IS

For Kramp-Karrenbauer it will prove very difficult to keep the party united. The worst job you could have today is to be a CDU strategist. The CDU is following in the footsteps of the SPD’s own experience of losing its status as a Volkspartei. It is being torn apart, as it tries to bridge the gap between the modern urban bourgeois voters it is shedding to the Green Party — low-energy-intensive capitalists, working professionals, high-ranking state employees like university professors and high-school teachers with socially liberal mindsets, who want the country run along neoliberal lines but in a smooth and civilized manner — and on the other hand its rural and suburban right-wing voters, who have been radicalized to the right as a result of the economic and geographic disparities which neoliberalism has created.

The CDU and CSU are both shedding these latter voters to the AfD. The appointment of Paul Ziemiak as CDU general secretary — a man who has spent his entire life so far in politics and has not managed to finish his bachelor’s degree — is an effort to bridge this divide, a signal to the right-wing dissatisfaction within the CDU.

However, given the centrifugal tendencies within society and within the party’s political milieu, it is unlikely that this operation will be successful. And the rumors of a significant exodus from the party following alleged machinations behind Merz’s defeat — that is, AKK promised Spahn that Ziemiak would be appointed, in order to win over his delegates — are a symptom of that failure already.

JB

Die Linke’s Bundestag faction co-chair Sahra Wagenknecht claimed that “Merkel 2.0” is not a solution, because she will continue the same style of policies which led to the rise of AfD.

IS

All the federal governments since the late 1990s have fed a social and economic polarization within society, with record levels of wealth inequality. The number of billionaires has doubled during the global financial crisis — rising from 102 to 200 since 2007 — while wages have continued to decline relative to profits.

The SPD/Greens’ Agenda 2010 welfare and labor reforms — oriented towards increasing the competitiveness of Germany (“the sick man of Europe”) by deregulating job security laws and permitting precarious/atypical employment contracts — and the continuation of these “reforms” by all ensuing governments have created a situation in which a quarter of all workers are employed in the low-wage sector. And they are bearing the brunt of Germany’s export-oriented growth model.

At the same time, the simultaneous Hartz welfare reforms, very similar to Clinton’s Temporary Assistance for Needy Families, have created a deep insecurity among the middle classes employed in the core export industries. For in the face of digitalization, precarization, and increasing career instability even high earners can be easily blackmailed into working harder and making concessions. Through capital relocation, automations, and mass layoffs, they can now be relegated to poverty and social exclusion: and this within just one year of unemployment, for younger workers, and within eighteen months for their older counterparts.

As studies of working-class consciousness by Klaus Dörre and the Jena University sociologists as well as Hamburg WissenTransfer researchers have shown, poverty, insecurity, permanent economization, physical/mental exhaustion, and fear are driving a tremendous anger, which the far right manages to direct against foreigners. The social polarization domestically and workers’ disillusionment with the neoliberalized SPD shifted several million SPD voters first to abstention — the SPD lost more than ten million votes since 1998 — and from there to the far right. The German left has only been partly able to take advantage of this bloodletting. And in that respect, while it may seem that the rise of right-wing authoritarian nationalism began with the “eurozone crisis” and “refugee crisis,” in reality this is the delayed harvest of the seeds sowed by Agenda 2010.

Under these conditions, it is not exactly true to say that the political spectrum is facing a shift to the right with AKK; we already saw a significant shift to the right under Merkel. The eroding neoliberal center has been trying to “undo” the rise of the far right by adopting much of its authoritarian policies and rhetoric and it does not realize that this only normalizes and strengthens the “real thing.”

And in spite of exit polls from recent state elections, for instance, which show that social justice, education, and such like still rank highest as voter concerns, the whole political discourse is dominated by the issue of migration. Given and in the extremely toxic way the AfD pushes the issue of migration and encourages attacks, if Germany continues on this course we are bound to see more and worse pogroms like the one in Chemnitz this year.

An important reason why migration is such a dominant issue is that the social democrats, who still have a working-class base — especially in the highly industrialized southwest, where Die Linke is still relatively weak — entered the grand coalition. As a result, the SPD cannot try and re-social-democratize itself by way of anti-neoliberal rhetoric.

This means that Die Linke is the only Bundestag party that sees and seeks alternatives to the private-before-public, market-driven, austerity-enforced, export-oriented economy. All other parties in the Bundestag, from the Greens to the AfD, fundamentally see no alternative to this kind of neoliberalism, let alone to capitalism. And as a result, the entire political discourse essentially takes place at the level of culture wars, which express the disintegration of society caused by neoliberalism and the social development left to market forces.

The questions which really affect the majority of the population, the millions of working people — old-age poverty, job insecurity, workers’ exhaustion, the housing issue — are omnipresent but not tackled. For how can you tackle them, if you can’t even consider that maybe the capitalist market is the problem and not the solution? What makes this removal of the economy and the social question from political debate so dangerous, however, is the fact that the rise of the far right cannot and will not be stopped until there’s a break with market-oriented policies that (as Karl Polanyi would have said) destroy society.

Society and nature as well. The far right is channeling anger and insecurities in the direction of barbarism, raising scandal if a single refugee out of the two million that are in the country or the millions more Germans with a migrant history commits a violent crime. This strategy will continue to be successful until we start talking about these issues again, and insist that market-driven development is the root of Germany’s social and political disintegration.

About the Author

Ingar Solty is the senior research fellow at the Rosa Luxemburg Foundation’s Institute for Critical Social Analysis in Berlin. He is author of several books including Imperialism and the forthcoming What is to Be Done in Dark Times? Perspectives against Crisis Capitalism, the Rise of the Right, and Islamist Terrorism.

About the Interviewer

Jerko Bakotin is a Berlin-based journalist.

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Since the beginning of the global financial crisis a decade ago, Germany has asserted itself as Europe’s dominant economic power; by 2024 it will also have the largest military budget in the European Union. Yet if from the outside Germany looks like an economic powerhouse and a re-emerging geopolitical force, it is also embroiled in […]

Since the beginning of the global financial crisis a decade ago, Germany has asserted itself as Europe’s dominant economic power; by 2024 it will also have the largest military budget in the European Union. Yet if from the outside Germany looks like an economic powerhouse and a re-emerging geopolitical force, it is also embroiled in […]

Since the beginning of the global financial crisis a decade ago, Germany has asserted itself as Europe’s dominant economic power; by 2024 it will also have the largest military budget in the European Union. Yet if from the outside Germany looks like an economic powerhouse and a re-emerging geopolitical force, it is also embroiled in […]